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Stock dividend could be substituted for cash dividend

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Reference no: EM133291510

Question 1. Do you go along with Clarence Autry's comment that it's what the stockholders want that counts, not their total rate of return? Why or why not?

Question 2. Barbara Reynolds suggests that, if cash is needed for the capital budget, a stock dividend could be substituted for the cash dividend. Do you agree? How do you think the stockholders would react? Regardless of their reaction, is the stock dividend an equivalent substitute for the cash dividend?

Question 3. After all is said and done, do you think the firm's dividend policy matters? If so, what do you think Montgomery's policy should be?

Reference no: EM133291510

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